31 years of economic growth in Washington

By Tim Raetzloff | Aug 21, 2013

The best way to measure how we are doing economically is look back at how far we have come.

Thirty-one years ago this week is a good place to measure from because this was the week in which the great bull market of the late 20th century began. The 1980s were also the decade in which Seattle and Washington began to matter in the national and world economy.

The 1980s Washington economy revolved around Boeing, just coming out of one of its every decade slumps. Burlington Northern had its headquarters here, but its operations were spread across the Western two thirds of the United States, and in a few years BN would move its headquarters from Seattle, leaving behind Burlington Resources for another seven years, and in turn leave Plum Creek behind when BR also left.

Weyerhaeuser was here as it had been for all of the century. PACCAR and SAFECO were here, as was Nordstrom. None of those were world-class companies.

SeaFirst, the largest local bank, still existed but the bad loans to Penn Square and ENI were about to take their toll and bring SeaFirst down.

Rainier Bank, the second largest bank, would soon be sold to Security Pacific.

In Spokane, gold and silver stocks dominated the Spokane Stock Exchange. Gold and silver prices had collapsed in early 1980; mining shares collapsed with the metals and would ultimately bring about the end of the Spokane Stock Exchange.

The biggest non-mining companies in Spokane were Old National Bank and Washington Water Power. The total market value of all Washington companies was about $10 billion and amounted to about 1 percent of the total value of the United States.

Market capitalization is calculated by multiplying the value of one share of stock by the total shares outstanding. No local company was among the 50 most valuable in the United Staes and none was in the Dow Jones Industrial Average.

The most notable economic news in Washington 31 years ago was WPPSS. Now almost forgotten, WPPSS (Washington Public Power Supply System, but more often known as ‘whoops’ – Homer Simpson would call that ‘doh’) was then falling toward the most expensive bond default in history, after failing to finance its ambitious project of five nuclear power plants.

Two of the abandoned plants are still very visible south of Highway 12 near Satsop.

Microsoft was a private company, apparently very successful, but with only a few hundred employees. Costco was just opening its first warehouse stores to mixed reviews.

Starbucks was a small specialty coffee company with something of a cult following. Craig McCaw was playing with very expensive toys called cellphones.

Amazon.com wasn't even a dream in the mind of Jeff Bezos, in fact there was nothing called a dot com in anyone's imagination.

The recession of the early ‘80s had been hard on the Seattle area and was not yet ended. They might be having a record day on Wall Street but it didn't matter here.

The largest local stock brokerage, Foster & Marshall, was sold to Shearson that summer. There was little local brokerage industry left, and it appeared that there would soon be no banking.

Fast-forward 31 years. Boeing became Seattle's and the Northwest's, first ever Dow Jones Industrial component company in 1987, and moved its headquarters away to Chicago in 2001, although in SEC filings its principal place of business is still Seattle.

Little Microsoft became a powerhouse, among the most profitable companies in the world, for three years Microsoft was the most valuable company in the world and still is in the top tier at more than $270 billion in market capitalization.

Microsoft became a Dow Jones Industrial component in 1999, the first ever that wasn't listed on the New York Stock Exchange.

Those Costco warehouse stores are now everywhere, and Costco is a Fortune 50 company. Starbucks is a world-class brand with stores in many countries.

Weyerhaeuser owns more trees than ever. PACCAR and Nordstrom have thrived. Plum Creek remains as a successful legacy from Burlington Northern.

Amazon.com sells around the world and has a market capitalization of more than $135 billion.

There are now 28 companies in Washington with a market capitalization of $1 billion or more. Nine are worth more than $10 billion, each one of those nine is now worth more than the entire state in the early 1980s.

At more than $660 billion in total Washington market capitalization, the value has increased at a compound rate of 14 percent a year, compared to the nation's 3 percent.

The Top 9 in Washington

Microsoft $273.2 billion

Amazon.com $136.7 billion

Starbucks $ 55.1 billion

Costco $ 50.7 billion

Paccar $ 19.8 billion

T-Mobile US $ 18.4 billion

Weyerhaeuser $ 16.0 billion

Nordstrom $ 11.5 billion

Expeditors International $ 10.4 billion

Perhaps most noticeable, there are now five significant companies in Spokane County, three in Snohomish County, two in Pierce, Clark and Walla Walla counties.

The total value of Washington companies has grown from about 1 percent of the national total in 1982 to more than 3 percent in 2013.

Boeing would be no more than third if it were still a Washington company. Washington was an outpost of the economy in 1982; Washington is a major contributor to the national and world economy in 2013.

Tim Raetzloff, who operates Abarim Business Computers at Harbor Square in Edmonds, evaluates Puget Sound business activity in his regular column in the Beacon. In the interests of full disclosure he says, “Neither I nor Abarim have any interest in or conflict with any company mentioned in this column.”

For 16 years I maintained the Abarim Snohomish County Stock Index; I ended it on June 30, 2010.

I can be found now repairing computers at Harbor Square in downtown Edmonds.

What I write combines my sense of history (ask me about my ghost town some time, but be prepared to listen a long time) and my sense of numbers.

How are we doing compared to 10 or 50 years ago?

Statistics are easy. Agreeing on what the statistics mean can be hard.

My view is seldom the popular one, not because I want to argue (those close to me know that I avoid arguments if at all possible), but because what the raw numbers say and what the spinmeisters say are often at odds.

I usually make the sources of the numbers I use available.

You can check on me; you should check on me, as you should check any other source.

Snohomish County is very much in the shadow of King County, and may always be.

King County is one of the top economic engines of the entire world.

Snohomish County, as the smaller sibling, often isn’t noticed much.

I try to pull Snohomish County business information out into the light.

Often that may be something bright that has been overlooked, but sometimes it comes from the dark side.

Don’t expect to agree with me all the time, but I hope you will consider what I have to say.